Vernon & Salmon Arm Business Lawyers Advising on Business Structures

Starting, growing, or incorporating a business can be extremely rewarding but also comes with a number of challenges. All options for business structuring must be carefully considered to maximize benefits and minimize financial risks. Every step of business planning is critical and comes with legal and business repercussions, from ownership to liability to tax implications. Properly planning for these issues starts with determining how your business will be structured.

The business lawyers at CM Lawyers have over 50 years of combined experience helping clients incorporate or otherwise structure new or existing companies. We thoroughly examine your options and help you determine the most advantageous business structure for your needs. We are experienced working with both small, family-owned businesses and multinational corporations. As a result, we are ideally positioned to advise you as your business grows, keeping you informed of potential pitfalls and opportunities along the way. We create a proactive plan that suits your current needs while being flexible enough to grow and change along with your business over time.

Considerations for Business Structures in British Columbia

There are many variables to consider when choosing a structure for a new or existing business, each with its own benefits and disadvantages. Some of these considerations include:

• Decision-making abilities;
• Tax implications;
• Personal liability;
• Start-up costs;
• Regulatory considerations;
• Ease of transfer; and
• Business succession planning.

At CM Lawyers, we are well-versed in all business structures and can help you choose the most beneficial option for your venture. Some common business structures are outlined below.

Sole Proprietorships

Sole proprietorships are businesses with a sole owner. They are simple and low-cost in terms of set-up, with minimal regulatory requirements. The owner retains full decision-making ability and can take advantage of considerable business-related tax deductions.

However, a sole proprietor is fully liable for the business’s debts and obligations. As a result, a creditor can make a claim against the owner’s personal assets in addition to the company assets.

General Partnerships

A general partnership is a non-incorporated business created by two or more people with equal ownership. Like sole proprietorships, they are simple and low-cost to establish. The partners share the business profits and management responsibilities equally and can take advantage of significant tax deductions.

However, as with sole proprietorships, each general partner faces unlimited personal liability, as well as liability for the decisions made by the other partners.

Limited Partnerships

Limited partnerships are non-incorporated businesses. They are overseen by one general partner and supported by limited partners. The general partner retains decision-making ability and enjoys a larger share of the profits. However, the general partner takes on the highest risk in terms of liability, as they are the only partner that can be held personally liable for the partnership’s debts.

The limited partners have limited liability, capped by the portion of capital they have contributed to the business. In exchange, they do not have a say in business decisions.

Joint Ventures

A joint venture differs from a partnership as it involves different business entities coming together to share resources while maintaining separate business identities. Each member of the venture shares only in the costs related to the specific venture. A sole proprietorship can be part of a joint venture.

Joint ventures allow businesses to partake in resources that may otherwise be too costly. For example, farm owners may start a joint venture to share expensive equipment that they only need some of the time, with each person maintaining their own separate business.

However, joint ventures have some downsides, as differing management styles can cause conflict. Additionally, all parties to the join venture can be negatively affected by the decisions of one (for example, careless use of expensive equipment resulting in costly damage).

Corporations

Companies can be incorporated at the provincial or federal level, creating a unique legal entity separate from its individual shareholders. Shareholders are not personally liable for the business’s actions, debts, or responsibilities. Further, a corporation can be transferred easily and continue to exist without those who created it. There can also be significant tax benefits.

Although ideal for protecting stakeholders from personal liability, corporations can be more costly to establish and are strictly regulated. Significant record-keeping is required, including annual reports that must be filed with the government.

Contact CM Lawyers in Vernon & Salmon Arm for Sound Advice on Business Structures

At CM Lawyers, we carefully review all business structure options with our clients to determine the one that provides the most benefit with the least risk. Our business lawyers know the challenges businesses can face, and we guide our clients to proactively and strategically address these challenges from the company’s inception. Our work doesn’t end once your business organization is in place, as we continually work with you on business maintenance and highlight changes as the business evolves.

With convenient locations in Vernon and Salmon Arm, CM Lawyers provides trusted business law advice across the Northern Okanagan and Shuswap. To schedule a confidential consultation, call our Vernon office at (250) 308-0338 or Salmon Arm office at (250) 803-9171, or reach out online.